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Facebook buys WhatsApp for a whopping $16B!

WhatsApp is one of the world's largest messaging apps, with over 450 million monthly users

Financial trends and news by Steven Loeb
February 19, 2014 | Comments
Short URL: http://vator.tv/n/3528

Mark Zuckerberg has made it clear that a big part of Facebook's mission has been to connect the entire world to the Internet. And what better way to do that than to buy up one of the world's largest mobile messaging apps?

Facebook has agreed to acquire mobile messaging company WhatsApp for a total of $16 billion, it was announced on Wednesday. 

The total price for WhatsApp includes $4 billion in cash, along with approximately $12 billion worth of Facebook shares. In addition, the agreement also provides for another $3 billion in restricted stock units, which are to be granted to WhatsApp's founders and employees, and which will vest over four years subsequent to the closing of the deal.

As per the deal, the company will continue to operate independently, as well as retain its brand, much like Instagram before it. WhatsApp currently which sees over 450 million people using it each month, and 70% of those users are active daily.

"WhatsApp's extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide," Jan Koum, WhatsApp co-founder and CEO, said in a statement.

"We're excited and honored to partner with Mark and Facebook as we continue to bring our product to more people around the world."

This is not the first time that Facebook and WhatsApp have been linked. In December 2012, a report from TechCrunch said that Facebook was in talks to purchase the app.

Both WhatsApp and Facebook denied it to me, but even at the time I noted that neither denial sounded especially strong, with both calling the story a "rumor," rather than an outright falsehood. 

WhatsApp will be Facebook’s second messaging app. In March 2011, Facebook acquired Beluga, a free and private group messaging service for iPhone and Android devices, for an undisclosed amount. Beluga was eventually transformed into Facebook Messenger, which was launched in August 2011.

This is not be the first time Facebook will have two apps that do, essentially, the same thing.

After Facebook purchased Instagram for $1 billion cash in April of 2012, it then went ahead and debuted its stand-alone Camera app for iOS, with 14 different filters such as cool, light, and copper, in May. The app also let users tag friends and locations, add a description, and post quickly within the app. In essence, it was an Instagram copy made by the company that had just bought Instagram!

Of course, that happened in reverse, with it only launching the stand-alone camera after it bought Instagram, while this time it bought a big-name messenger service after launching its stand-alone.

The Santa Clara, California-based WhatsApp was founded in 2009, and raised $8 million in funding from Sequoia Capital in April 2011.

"WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable," Zuckerberg said in a statement. "I've known Jan for a long time and I'm excited to partner with him and his team to make the world more open and connected."

(Image source: http://www.pc-tablet.co)


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